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Want to set up child life insurance policy You Need To Read This First .

For every parent, their child is very special. To fulfill their dreams and aspiration, they just can’t stop finding the best options and solutions for their child needs. Primary education, Higher education, marriage, extra spends and more are all part of responsibilities for your child.

HERE, child insurance plan comes into picture

CHILD insurance plans help you plan your child ‘s career and future milestones in a structured manner. These plans take care of your child’s dream in the event after you pass on.

why should I buy children policies?

– The plan enables you to save systematically until your child turns 17 years for his/her graduation or post-graduation college fees

  • It offers you three options to receive Guaranteed payouts depending on your child’s education milestones so that you receive the money when it is actually needed
  • Your child’s education is secured even in case of an unfortunate event in your life
  • You can further strengthen your plan by opting for riders which covers you against an accidental death and/or accidental total and permanent disability
  • You are eligible for Tax benefits as per prevailing tax laws

What are the benefits of children policies?

1-Maturity Benefit:

you can be in complete control of your child’s higher education by receiving guaranteed payouts. These payouts are designed in such a way that you are sure to use it only for payment of admission or tuition fees. Moreover, you have the flexibility to choose between the different options, for your clarity we have illustrated different options which is as same as the companies provide you.

Let us understand your benefits with the help of an example

Rajnikanth is 30 years old and the father of a 1-year-old, Aryan. As per his financial plan, he needs to get  20 lakhs to fund Aryan’s tuition fees through yearly payouts.

  • He can choose to receive the maturity benefits as yearly payouts either as per Option A, B or C.
  • The Policy Term and Premium Payment Term is 16 years as Aryan is 1 year old at beginning of the policy
  • When Aryan turns 17 years, Rajnikanth will start receiving the guaranteed payouts.
  • The company has options A, B or C, to receive these payouts as per raj child’s education milestones

Rajnikanth has the option to receive this as under

Now, let’s know more about the available options.

2-Death benefit

Uninterrupted protection for your child’s education

This plan ensures that your child’s education would not suffer in case you are not around. In such an unfortunate event, the company makes sure  that  your child gets the following guaranteed benefits to help achieve all the education milestones you have planned for:

The company will :

  • Waive off all future premiums payable under the policy
  • Immediately pay guaranteed Death Sum Assured to ensure your family’s immediate needs are taken care off
  • Pay 5% of the Sum Assured immediately and on every death anniversary of the life assured till your child turns 17 years. This Guaranteed amount can be used to fund your child’s regular school fees.
  • Pay Maturity Benefit (100% of Sum Assured) as per your chosen option while purchasing the plan

Death Sum Assured shall be highest of the following:

  • 10 times annualized Premium(excluding taxes, rider premium and extra premiums, if any), or
  • 105% of total premiums paid (excluding taxes, rider premium and extra premiums, if any) as on date of death, or
  • Maturity Sum Assured, which is equal to the Sum Assured
  • Absolute amount payable on death, which is equal to the Sum Assured

Let’s UNDERSTAND THE  DEATH BENEFIT FROM THE PREVIOUS EXAMPLE :

Rajnikanth has purchased XXX COMPANY”S  Assured Education Plan and he opted for Option B. He meets with an accident which causes his untimely death within one year after purchasing the policy. The benefits paid out to Raj’s family will be as under:

Rajnikanth is 30 years old and his son Aryan is 1 year old. He opts for a Sum Assured OS RS 20 LAKHS

and payout as per option B.

SO THE BENEFITS OF CHILD PLANS ARE –

WHO IS ELIGIBLE FOR CHILD PLANS?

ENTRY AGE:                               Age of the parent: 21-50 years

( Age mentioned refers            Age of the child: 0-10 years

to age as on last birthday)

Maturity Age:                            minimum: 35 years

(Age mentioned refers              maximum: 67 years

to age as on last birthday)

Policy term:                                17 years minus age of the child at the time of purchase

i.e Minimum of 7 years if the child’s age is 10 years to maximum of 17

years in case of a newborn child.

Premium Payment Term          Will be same as policy term                                                                                          Premium payable                                           minimum premium

Rs20000 annually OR

Rs 2000 MONTHLY

There is no maximum premium limit

Premium payment                      The premiums can be paid in annual or monthly modes only. Monthly

frequency                                      premiums can only be paid by Electronic Clearing System (ECS)

The Premiums for monthly mode is 8.83% of annual premium.

For payout different companies have different options.

let us consider payout option of the xxx company

RIDERS

You can strengthen your financial security by opting to purchase a suitable rider. A rider is an add-on insurance plan that provides you additional insurance cover along with your regular insurance plan by paying an additional nominal premium.

THERE ARE TWO TYPE OF RIDERS AVAILABLE ON CHILD PLANS

1-ACCIDENTAL DEATH RIDER

2-ACCIDENTAL TOTAL & PERMANENT DISABILITY RIDER

HOW IT WORKS AND WHAT ARE THE STEPS

STEP-1

STEP 2

STEP-3

STEP-4

TIPS TO CHOOSE CHILD INSURANCE PLANS

PREMIUMS PAYMENTS – Depending on your budget, choose a plan that will meet your child’s requirements easily

RISK COVERAGE – some child insurance plans give more risk coverage aspect. Kids today are highly interested in different activities like sports, dance, music etc and as a parent, you would definitely be concerned for your kid’s protection. Policies with a good risk coverage would definitely have a high premium charge but the strong protection that it will provide will leave you tension- free

money back plans – In these child plans, policyholder has to pay the premium amount regularly and the insurer agrees to pay an assured sum of money  at the time of maturity of the plan .

 

Rakshit Nair

Rakshit Nair

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About Me

I’m a Commerce Graduate & CFP Professional, engaged in blogging since 3 years. I’m not affiliated with any financial product. The purpose of writing blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

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